PARIS (MNI) - Germany and France are involved in talks that could produce an agreement for both state-owned and private banks to buy upcoming Greek debt issues worth up to E30 billion, backed by government guarantees, according to several press reports published over the weekend.

Among the banks mentioned as possible participants are France's state-run Caisse des Depots, Germany's state-owned KfW, and privately-owned Deutsche Bank, whose CEO Josef Ackerman was in Athens Friday for talks with Greece's Prime Minister George Papandreou, according to reports in the Financial Times and Associated Press.

The FT quoted a "senior German bank official," who said the German government was seriously considering giving guarantees -- through its development bank, KfW -- to banks that bought Greek debt.

The FT noted that several such banks, including Hypo Real Estate, Eurohypo and Deutsche Postbank -- which hold billions of euros of Greek debt -- have all said they would not increase their holdings. However, the newspaper speculated that guarantees from Berlin on what would be high-yielding securities might soften their stance.

Purchases of Greek debt by these banks "could be one of the outcomes, but it would not be a purely private solution -- there has to be government involvement," the senior German bank official was quoted as saying by the FT. "If it were something on a Eurozone level, I don't think my bank would say: 'We would not take part.'"

One unnamed source told the Wall Street Journal that the use of state-owned financial institutions might enable the German and French governments to get around regulations that could prohibit governments from owning the debt of other nations.

The debt sale being mulled would be between E20 billion and E30 billion, which is the amount needed to pay off maturing debt this spring, the Wall Street Journal said. About E22 billion worth of Greek debt is maturing in March and April, and Greece is looking at a borrowing need of about E54 billion for the whole year.

But the markets' lack of faith in the ability of Greece to slash its huge budget deficit as promised has caused spreads on Greek debt to rise and stirred fears that the country's cost of borrowing could be crippingly punitive -- if it is able to borrow at all.

The Wall Street Journal, quoting a Greek official, said Greece had hopes of selling E3 to E5 billion worth of debt "within the next week." Athens is still planning that sale, the official said, with a final decision expected in "several days."

Meanwhile Eurozone states, the European Commission and the European Central Bank are pushing the Greek government to announce deeper cuts and steeper levies in order to honor its promise of cutting the country's budget deficit by four percentage points of GDP this year alone, from 12.7% to 8.7%.

As Market News International reported last week, Greece has already agreed to about E3.5 billion in additional deficit-cutting measures, which it expects to announce next week.

However, the ECB, IMF and European Commission, which issued a report on Greece after a mission there last week, do not believe that's enough. They believe the country's current plan falls short by E4.8 billion. Oli Rehn, the European Commissioner for Economic and Monetary Affairs, will be in Athens Monday to discuss the discrepancy and Greece's plans for additional measures.

The Wall Street Journal, noting "strong political obstacles" in Germany to any rescue plan for Greece, said the new measures might not be enough to convince German officials. Given outright opposition from many members of the ruling coalition, aid for Greece will be granted only as a last resort, the paper said. It quoted an unnamed German government official saying that Berlin would not send German taxpayer money to Greece "just as a reward for some new announcements."

A French official, more favorable to a Greek package, tread lightly on account of German resistance. "We are ready to help Greece and to consider all appropriate measures depending on their acceptability to our Eurozone partners, notably Germany, because we started this process bilaterally and we are keen to continue in the same way," the official told the Wall Street Journal.